Lynas balances precarious rare earths business

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She said in the book, Unfinished Business, that the establishment of the site sent a message “that a developing country’s government can be bullied by a company from the developed world and had no choice but to put up with it in the name of economic development”.

“This is the very reason why, from the very beginning, I pushed – unsuccessfully – for the waste to be shipped out of the country,” she said.

Lynas Corp chief executive Amanda Lacaze has said the group needs to double its production to keep up with demand. Credit:Ian Teh

It’s a turbulent period in Malaysia’s politics. The country has twice changed governments since Mahathir’s second stint as leader unravelled in 2020. The latest person to occupy the prime minister’s office – his former understudy and foe Anwar Ibrahim – has in the past been among the politicians to call for a review of Lynas’ licence being renewed.

One of Lynas’ most vocal opponents Fuziah Salleh, who was a three-term MP in Kuantan, the electorate where the plant lies, is now a deputy minister in Anwar’s government but, surprisingly, may be less of a threat.

She was made a senator after losing her seat in the recent election and her portfolio of domestic trade and cost of living is unrelated to Lynas.

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Bridget Welsh, a research associate with the Asian Research Institute at the University of Nottingham, Malaysia, said the presence of Lynas remained a highly charged issue in the south-east Asian nation and could be seen as litmus test for a new government being pressed to engage in reforms.

“I do think this is a much more pro-environmental government and I think there will be reviews of key strategies,” Welsh said.

“But I don’t think Lynas is in the crosshairs at this particular juncture in part because there is no state election [coming up] in Pahang and because the government has got so many other fires that they’re probably not going to pick this particular battle.”

Lynas chief executive Amanda Lacaze will need both the decisions on the licence and related conditions to go her way to fulfil the immense opportunity before the group. But as she told investors and analysts this week, the company is preparing for every scenario – including a worst-case.

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“The best possible scenario is one where we’re running two facilities, which gives us a straight uplift in throughput, right through to one where we are required to close down one facility and operate the other,” she said.

“It will be clear long before the first of July which of those we will be required to execute.”

The best-case scenario will be a big win for investors as Lynas seeks to keep up with demand for rare earths – 17 elements crucial to the manufacture of many hi-tech products such as mobile phones, electric cars and wind turbines.

Lynas has outlined plans to increase production at its Mt Weld mine in Western Australia, and expand its rare earths processing everywhere it possibly can.

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This includes retaining cracking and leaching in Malaysia on top of its new facilities in WA.

“We need to double our production basically,” Lacaze told shareholders at last year’s annual meeting.

“That means we’ve got to do more at each stage, that we will have some additional separation assets like the proposed plant in the US. But by far the most cost-effective way ever to increase production is by increasing everything in your existing assets.”

But it was her lack of clarity on when Kalgoorlie will be operational that drew the attention of some analysts.

Goldman Sachs Paul Young noted the timeline for matching up Kalgoorlie with the potential loss of its Malaysian license. It looks tight to say the least.

“Based on construction progress we think full ramp-up will be achieved at the end of 2023 at the very earliest, meaning either the Malaysian government must extend the waste disposal license for the cracking and leaching kilns at the Lynas (plant) or production (in Malaysia) may have to be temporarily curtailed,” he said in a report this week.

The Malaysian government appears to be cognisant of these issues. A delegation from Malaysia visited the Kalgoorlie site in December and Lacaze says Lynas is actively engaged with both the government and the regulators.

“Our position is that we have we run a low-risk operation, we are a lawful company, which is compliant with all regulations. And we have never been involved in any sort of health or environmental incident,” she says.

“All that we seek from government is that the (licence) decision is fact-based and not made on the basis of some of the alarmist statements from some activist groups – which even the IAEA (International Atomic Energy Agency) has said, have no basis in scientific fact.”

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